Irwin Allen Schiff (; February 23, 1928 – October 16, 2015) was an American tax protester, tax resistance advocate and libertarian. He was known for publishing and promoting literature about the illegality and unconstitutionality of U.S. income tax. Schiff also operated an office in Las Vegas, where he provided personalized tax counseling to his clients.
Judges in several civil and criminal cases ruled in favor of the federal government and against Schiff. As a result of these judicial rulings Schiff was in a hospital prison serving a sentence of 162 months (13.5 years) at the time of his death.
Schiff was the father of businessman and former United States Senate candidate Peter Schiff.
Early life and career Schiff was born to a Jewish family in New Haven, Connecticut. His parents were immigrants from PolandThe American Conservative: "Dr. Doom Runs for Senate" By Michael Brendan Dougherty October 1, 2009 and his father worked as a carpenter. In 1950, Schiff attended the University of Connecticut where he obtained a B.S. with a double major in Accounting and Economics.Schiff v. Commissioner, 47 T.C.M. (CCH) 1706, T.C. Memo 1984-223, CCH Dec. 41,174(M) (1984), aff'd per curiam, 751 F.2d 116, 85-1 U.S. Tax Cas. (CCH) ¶ 9108 (2d Cir. 1984).
After college, Schiff was in the insurance brokerage business in Connecticut. In connection with his business, he was involved in a tax shelter in which he became the victim of a Ponzi scheme in which he lost money belonging to him and his clients.Jason Zengerle, "Hell Nay, We Won't Pay," March 29, 2009, The New York Times, at . In 1968, he testifiedUnited States v. Schiff, 612 F.2d 73, 80-1 U.S. Tax Cas. (CCH) ¶ 9112 (2d Cir. 1979). before the Senate Committee on Banking and Currency in opposition to the removal of gold backing from Federal Reserve Notes.
Tax resistance activism Schiff had filed income tax returns through the tax year 1973. For years 1974 and 1975, however, he refused to disclose his income. Instead, he sent unsigned 1040 forms to the Internal Revenue Service with the title ("U.S. Individual Income Tax Return") changed to read "U.S. Individual Income Confession." Instead of disclosing income, he included assertions of various constitutional rights on the forms, claiming essentially that under the Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Thirteenth Amendments he would not be an "involuntary serf" of the U.S. government. Schiff contended that because Federal Reserve notes were not backed by gold, they were not "income" for purposes of the federal income tax.
In 1976, Schiff published a book entitled The Biggest Con: How the Government is Fleecing You. He began conducting seminars on federal income taxes in 1977. On April 12, 1978, Schiff appeared on the NBC television program The Tomorrow Show with host Tom Snyder, arguing his views on federal income taxes.
Schiff operated his tax protester activities from a storefront in Las Vegas, where he would sell his books and tapes and do tax consulting. His appearances on national television shows made him a familiar media presence. Schiff also had a web site named "PayNoIncomeTax.com," which offered his various books for sale. He was featured in Hollywood producer Aaron Russo's 2006 film America: Freedom to Fascism.
In 2003, the Internal Revenue Service had identified about 5,000 tax returns filed by about 3,100 of Schiff's customers in a three-year period, reportedly representing about $56 million in attempted tax evasion.United States v. Schiff, 269 F.Supp. 2d 1262, at 1268-1269 (D. Nev. 2003).
Arguments raised by Schiff
Among the arguments raised over the years by Schiff: That the Internal Revenue Service, in enforcing the income tax, seeks to impose a tax not authorized by the taxing clauses of the United States Constitution; That no statutory deficiency in Federal income tax can exist until a voluntary assessment has been made; The filing of income tax is explicitly voluntary, and "voluntary compliance" is a contradictory phrase used by the IRS to mislead the public; That no tax assessment can be made unless a tax return has been voluntarily filed; That the United States Tax Court has no authority to codify; and That the United States Tax Court is not a legal court, but is instead a part of the IRS. That "income" as properly defined according to his reading of court decisions and statutes, is not wages, but only corporate profits. These arguments were ruled invalid in Schiff v. Commissioner.63 T.C.M. (CCH) 2572, T.C. Memo 1992-183, CCH Dec. 48,108(M) (1992). Another argument made by Schiff on his web site is: "On the 1040 itself... you report 'zero' income regardless of how much you received in: wages, commissions, interest, alimony, capital gains or from operating a business. For tax purposes, 'income' only means corporate 'profit.' Therefore, no individual receives anything that is reportable as 'income'." This argument has been rejected by the lower courts, as well as the United States courts of appeal. See Cameron v. Internal Revenue Serv.;593 F. Supp. 1540, 84-2 U.S. Tax Cas. (CCH) ¶ 9845 (N.D. Ind. 1984), aff'd, 773 F.2d 126, 85-2 U.S. Tax Cas. (CCH) ¶ 9661 (7th Cir. 1985). Stoewer v. Commissioner;84 T.C.M. (CCH) 13, T.C. Memo 2002-167, CCH Dec. 54,805(M) (2002). Reinhart v. United States;2003-2 U.S. Tax Cas. (CCH) ¶ 50,658 (W.D. Tex. 2003). Fink v. Commissioner;85 T.C.M. (CCH) 976, T.C. Memo 2003-61, CCH Dec. 55,068(M) (2003). Flathers v. Commissioner;85 T.C.M. (CCH) 969, T.C. Memo 2003-60, CCH Dec. 55,067(M) (2003). Schroeder v. Commissioner;84 T.C.M. (CCH) 220, T.C. Memo 2002-211, CCH Dec. 54,851(M) (2002), aff'd, 2003-1 U.S. Tax Cas. (CCH) ¶ 50,511 (9th Cir. 2003), cert. denied, 540 U.S. 1220 (2004). Sherwood v. Commissioner;T.C. Memo 2005-268, CCH Dec. 56,200(M) (2005). and Ho v. Commissioner.T.C. Memo 2006-41, CCH Dec. 56,447(M) (2006).
According to his son Peter, Schiff was "most known for his staunch opposition to the federal income tax, for which the US government labeled him a 'tax protester.' But he had no objection to lawful, reasonable taxation."
Libertarian Party candidate Schiff was a candidate for the Libertarian Party presidential nomination in 1996, and he participated in a Libertarian presidential candidates debate in Washington on July 5, 1996.Libertarian Presidential Candidates Debate, C-SPAN He lost the New Hampshire presidential primary to Harry Browne, but won a plurality of the vice-presidential primary vote as a write-in candidate.
Legal issues Convictions for 1974 and 1975 tax years Six days after his 1978 appearance on The Tomorrow Show, Schiff was charged with willful failure to file tax returns for the years 1974 and 1975.See . The modified, unsigned 1974 and 1975 forms, with no income information on them, were deemed by the Internal Revenue Service not to be valid Federal income tax returns under . During the resulting trial, a videotape of the television program was shown to the jury. Schiff was convicted on both counts and appealed his conviction to the United States Court of Appeals for the Second Circuit.
At the Court of Appeals, the admission of the videotape was ruled unduly prejudicial, the conviction was overturned, and the case was remanded for a new trial. He was convicted a second time for failure to file, and that conviction was affirmed.United States v. Schiff, 647 F.2d 163 (2d Cir. 1981).
Convictions for 1980 through 1982 tax years In October 1985, Schiff was convicted of tax evasion with respect to his personal income taxes for years 1980, 1981, and 1982, and willful failure to file a corporate tax return for Irwin A. Schiff, Inc. (a company for which he served as president), and that conviction was affirmed the following year.United States v. Schiff, 801 F.2d 108 (2d Cir. 1986), cert. denied, 480 U.S. 945 (1987) and United States v. Schiff, 2003-2 U.S. Tax Cas. (CCH) ¶ 50,546 (D. Nev. 2003). Schiff was released from the Federal prison system in June 1993. Despite having spent four years in the system, he continued his tax protest related activities.
Civil tax problems for tax years 1979 through 1985 In June 2004, a Federal court ruled that Schiff was liable for over $2 million in taxes, penalties and interest for the years 1979 through 1985. In that case, Schiff's attorney had filed a brief claiming a diminished capacity defense, contending that Schiff had been diagnosed with a chronic, severe delusional disorder relating to his beliefs about the federal income tax system. That was characterized by some of his opponents as a claim that those beliefs were the product of a delusion or even insanity and that Schiff had willingly allowed his defense counsel to raise such an argument.
Schiff responded to these claims and stated that the diminished capacity defense was an attempt to prevent the judge from rendering a summary judgment and instead allow a jury trial. Schiff also asserted that this was different from an insanity defense. Schiff, in his statement on the matter, asserted that the judge erred in not putting this question to the jury and insisted that "(1) no one is required to pay income taxes; (2) the entire federal judiciary is involved in a monumental, criminal conspiracy to collect income taxes in violation of law." , Schiff's internet web site still included a claim that the U.S. federal income tax had been repealed in the 1950s and that U.S. officials were engaged in a conspiracy: "Since the income tax was repealed in 1954 when Congress adopted the 1954 Code, it is clear that for 50 years federal judges in conspiracy with U. S. Department of Injustice prosecutors have been illegally and criminally prosecuting people for crimes that do not exist in connection with a tax that nobody owes."
Case regarding The Federal Mafia In his 1992 book The Federal Mafia, Schiff contended that the income tax system and Internal Revenue Service were illegal. On August 9, 2004, the Ninth Circuit Court of Appeals found the book to be fraudulent and upheld an injunction issued by a U.S. District Court in Nevada under against Irwin Schiff and associates Cynthia Neun and Lawrence Cohen against the sale of this book by those persons.United States v. Schiff, 379 F.3d 621, 2004-2 U.S. Tax Cas. (CCH) ¶ 50,328 (9th Cir. 2004), cert. denied, 546 U.S. 812, 126 S. Ct. 334 (2005). The injunction relates to "specified conduct" subject to penalties under and . The prohibition does not extend to other sellers of the book.
The court rejected Schiff's contention on appeal that the First Amendment protects sales of the book, as the court found that the information it contains is fraudulent, as it advertised that it would teach buyers how to legally cease paying federal income taxes.See also footnote 1, United States v. Schiff, 2008-1 U.S. Tax Cas. (CCH) ¶ 50,111 (9th Cir. 2007), citing United States v. Schiff, 379 F.3d 621, 630 (9th Cir. 2004), cert. denied, 546 U.S. 812, 126 S. Ct. 334 (2005), regarding the Court's finding that the book The Federal Mafia: How the Government Illegally Imposes and Unlawfully Collects Income Taxes constituted "fraudulent commercial speech".
Schiff, Neun, and Cohen were barred under the injunction from selling or advertising material advocating nonpayment of tax, from preparing a tax return for others, and from otherwise providing assistance or encouragement to others in violating tax law. Schiff and his associates were additionally required to provide a copy of the injunction to each of their customers, post it on their website, and provide the government with a customer list.United States Department of Justice press release regarding The Federal Mafia case
Schiff and his associates responded by providing the book for free on their website.
Convictions for 1997 through 2002 tax years